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Has BP Finally Found A Floor?

Wednesday, 16 Jun 2010 | 6:06 PM ET

The desk is keeping a close eye on the action in BP after shares popped Wednesday in the wake of a dividend suspension.

The oil giant made the somewhat controversial move after a 4 hour meeting with President Obama.

Along with suspending the dividend payment – totaling about $2.6 billion this quarter – the company agreed to sell about $10 billion in assets with the money going into a $20 billion fund dedicated to pay damages.

In addition, BP won't declare a dividend for the second and third quarters.

BP shares gyrated as the events unfolded, but ultimately they closed higher.

I expect this will ease political strains on the company, says Argus analyst Phil Weiss on Fast Money. But suspending the dividend was merely bowing to political pressures; it wasn’t out of financial necessity.

What else must you know about these events before you place your next trade?

Instant Insights with the Fast Money traders

I see the move in BP as almost a relief rally, explains Gary Kaminsky, because the $20 billion did not have be funded immediately. And it wouldn’t surprise me to see them sell U.S. assets they obtained when they acquired Amoco.

I expect the potential buyers of those assets are Exxon , Shell, Chevron and/or Occidental , speculates Joe Terranova. And I’m a buyer of all those names on these developments.

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Looking at the dividend suspension; the move will likely send energy investors into other names that do pay dividends, says Tim Seymour. I think these developments ultimately send them higher. Also all the new regulations and restriction on deep-water drilling seem like catalysts to drive the price of oil higher.

If you're looking to play BP I noticed unusual action in the Jan 7.5 puts, says Pete Najarian. That could be a very bearish sign.

If you must trade BP, 29 is a point of reference, adds Guy Adami. It’s the low the stock made back on June 9th. But if you’re looking for an energy trade, I think McDermott is the play, he says.
Or look at Suncor as a play on Canada’s oil industry, adds Gary Kaminksy.

In the space I'd take a look at Weatherford, says Pete Najarian.




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Trader disclosure: On June 16, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BAC), (NOK), (SBUX); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC); Adami owns (MSFT); Adami’s wife works at Merck; Terranova owns (IPSU), (BX), (PFE), (UDN), (GMCR), (RSX), (TER), (AXP), (BMO), (BBY), (DIS), (XCO), (SWN), (AAPL), (IPI), (SU), (V), (TEVA), (FXE), (FXB), (XOM), (COP), (OXY), (RDS.A); Terranova owns S&P Futures; Terranova owns UK Pounds; Terranova is short the US Dollar; Edwards owns (PM); Pete Najarian owns (AMD) calls; Pete Najarian owns (BAC); Pete Najarian owns (BBY) a call spread; Pete Najarian owns (C) calls; Pete Najarian owns (TCK); Pete Najarian owns (CNI); Pete Najarian owns (NOVL); Pete Najarian owns (MRVL); Pete Najarian owns (XLNX); Pete Najarian owns (MCD) a call spread; Pete Najarian owns (TEX) calls

For JoeTerranova
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Deutsche Bank provided non-investment banking securities-related services to PHM, HOV

For Anthony Scaramucci
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